I fail to understand the logic behind all of this. Why not give the money to the universities directly? It seems super inefficient to create a whole industry around funding university education. Even more so when this system needs to be backed by government bailout guarantees.

With 'efficient' I mean converting a large percentage of high school kids into university degrees / or better a highly skilled work force. Handing >$10^6 in debt to these kids doesn't seem appealing at all. One might argue that the economic pressure of the debt increases the overall productivity of a workforce. However, doesn't it rather create a predominantly sad workforce?